Employment Relations and Corporate Governance
| DOI | http://doi.org/10.1111/1467-8543.00283 |
| Date | 01 September 2003 |
| Published date | 01 September 2003 |
| Author | Stephen Wood,Edmund Heery |
Employment Relations and
Corporate Governance
Edmund Heery and Stephen Wood
Corporate governance has increasingly come to the fore in the discussion of
employment relations. Stimulated by the literature on forms and varieties of
capitalism, it broadens the attention given to the economy from a past focus
on product markets. So, in the case of Britain, the pressure from a system of
corporate governance that privileges shareholder value has been associated
with the failures of vocational education and training, the limited diffusion
of high-involvement work systems and the persistence of adversarial indus-
trial relations. This pressure is assumed to be mediated by business strategies
that prioritize cost reduction and managerial control systems that are centred
on financial performance. A descending and constraining set of linkages has
been identified from the system of corporate governance, through business
strategy and structure to the management of labour and labour’s reciprocal
(typically low-trust) response.
The British Journal of Industrial Relations has published this symposium
in recognition of this growing interest in the relationship between corporate
governance and employment relations. In the first contribution, John
Parkinson reviews perspectives on the firm and their implications for corpo-
rate governance and the extent to which it is responsive to the interests of
employees. In the first two models examined, which conceive of the firm as,
respectively, the property of shareholders and a nexus of contracts, investors
have the exclusive right to appoint the board, and labour is considered an
‘outsider’, whose relationship with the company is based on contract rather
than status. These are the models that legitimate and underpin the dominant
form of corporate governance in Britain. In the third model, which Parkinson
argues for, the company is viewed as a social institution, whose governance can
and should incorporate social objectives, such as extending citizenship and
participation. In its weakest form this can support a benign management,
balancing the different interests within the firm and acting independently of
shareholders. In stronger forms it can support a range of institutional
changes, including formal representation of non-shareholders on company
boards, the use of two-tier boards, the incorporation of stakeholder interests
British Journal of Industrial Relations
41:3 September 2003 0007–1080 pp. 477–479
Edmund Heery is at the Cardiff Business School. Stephen Wood is at the Institute of Work
Psychology at the University of Sheffield, and an associate of the Centre of Economic
Performance, London School of Economics.
© Blackwell Publishing Ltd/London School of Economics 2003. Published by Blackwell Publishing Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
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